Finance chief lists three possible conditions for killing off of luxury tax

Chang Sheng-ford, head of the Ministry of Finance, yesterday cited three conditions under which the so-called luxury tax would be abolished.

Chang made the remarks during a Q&A session at the Finance Committee of the Legislative Yuan, where lawmakers urged the ministry to rescind the tax.

According to lawmakers, luxury tax collection totaled NT$5.327 billion between June last year, when the tax went into effect, and September this year. The figure was about a third of the NT$15.1 billion the government had predicted. Of the NT$5.327 billion, about NT$3.586 billion came from property sales.

Responding to this, Chang said the shortfall was due to a property sales decline, which he said resulted from a reduction in speculation.

Home sales between January and August dropped 17.2 percent and 14.56 percent compared to the same period in 2011 and 2010, respectively, and sales in Taipei and New Taipei fell anywhere between 27 percent and 38 percent, he said.

"Yet home purchases for residential purposes rose from 52.6 percent in the first quarter of 2011 to 58.5 percent in the first quarter of this year," he said.

In terms of price, Chang said Taipei unit prices dropped in June this year compared to the time before the luxury tax, while those in the other four major metropolises increased only slightly.

He said for the luxury tax to be abolished, three things must happen: the current regulation that gives a tax break on sales of land owned for less than a year must be changed, government-announced property value must come close to the actual market value, and property speculation in the market must be eradicated.